Court ruling may put net neutrality at risk

What’s next

Among the FCC’s options:

Ask Congress for authority to regulate broadband.

Appeal Tuesday’s decision.

Reclassify broadband as a more heavily regulated service.

WASHINGTON – In a blow to Internet giants such as Google and Yahoo, a federal appeals court issued a ruling Tuesday that could sharply curtail regulators’ power to force Internet service providers such as Comcast and AT&T to treat all Web traffic equally.

By calling into question the FCC’s authority to regulate broadband firms, the ruling by the U.S. Court of Appeals for the District of Columbia also could crimp key components of the commission’s just-launched plans to extend high-speed Internet to tens of millions of Americans who lack it.

Specifically, the court ruled that the FCC failed to establish its legal authority for an action it took against Comcast in 2008. The FCC said at the time that Comcast improperly blocked its consumers from using BitTorrent, an Internet application used to share large files, such as movies.

The court decision is a stinging setback for proponents of so-called net neutrality rules, which would require Internet service providers to treat all Internet traffic equally. Without such rules, critics fear that Internet service providers could play favorites on their networks, blocking or charging for video or other content that competes with their own offerings, or offering lower speeds for those outside services.

“The ramifications of this go far beyond Comcast blocking BitTorrent,” said S. Derek Turner, research director for the consumer advocacy group Free Press. “The FCC is essentially unable now to protect consumers and implement the national broadband plan.”

Others call those worries overblown and say the bigger threat is government regulation of the fast-evolving Internet.

“This is not going to change anything a bit,” said Verizon’s executive vice president and general counsel, Randal Milch, referring to the company’s Internet service.

Internet content companies such as Google (which owns YouTube), Yahoo and Facebook are big supporters of net neutrality rules, which would guarantee them unfettered access to broadband networks. Others argue that the lack of such regulations could hurt innovation on the Web, potentially forcing content creators to negotiate with broadband companies to secure adequate access to their pipes.

FCC Chairman Julius Genachowski, who was appointed by President Barack Obama, has made net neutrality a centerpiece of his agenda. A spokeswoman for Genachowski said in a statement that the FCC remains “firmly committed to promoting an open Internet and to policies that will bring the enormous benefits of broadband to all Americans.”

But it was unclear Tuesday what the FCC’s next move will be. It could move to reclassify broadband as a telecommunications service (it was categorized as an information service during the Bush administration), giving the FCC direct authority over Internet service providers in the same way it is able to regulate phone companies. But that would likely entail years of rule-making and legal proceedings, potentially delaying Genachowski’s ambitious broadband agenda.

The commission could ask Congress to pass legislation giving it authority over broadband. But that would likely trigger opposition among Republicans opposed to broader government regulation.

Or, the FCC could opt to appeal to the U.S. Supreme Court.

While the court ruling isn’t likely to affect Internet users overnight, some critics said it could, in time, dramatically change the Web experience.

Eric London, a spokesman for the Open Internet Coalition, a group that includes Google and other companies, said that one potential result of the court decision is that consumers would have to pay more – or could be blocked – if they decide to access data-intensive services, or services that compete with products offered by Internet providers such as AT&T, Verizon or Comcast.

“Consumer choice is the core issue here – consumers being able go where they want to go on the Internet, and use the applications they want to use on the Internet,” London said.